03/14/2012 03:46 pm ET

In Healthy Credit, Timing Is Everything

A client of mine recently reported back to me that she had been successfully approved for a mortgage. She told me about the experience of going into her bank and sweating buckets at the approval process. Although she thought her credit was good, she was fearful of getting a "no" from the banker.

The banker pulled up her credit report and then reviewed it with her.

My client held her breath. Was there a new late on her credit card? No . Was it a maxed out credit card from a few years ago that had since been paid off? No. She heard the banker say one thing over and over:

"Oh good, you've had this account since 1994," and "you've got an account since 1999" and "Wow, you've had this account since 1984!"

What was the banker looking for?


While there ARE other factors that go into determining your credit score, timing is one of the issues that many people don't fully realize just how it impacts their credit. They don't fully appreciate the level of importance that credit agencies and lenders place on timing.

What is timing in your credit report?

Creditors and lenders use your credit report to figure out if you are likely going to pay back any money you are loaned. A long history of getting credit and paying back loans shows that you are in it for the long haul. The longer, the better. A sudden burst of loan and credit card applications in the past six months alerts the credit reporting agency to a spike in your available credit with no proof that you have been paying anything back.

Accounts that have been open a long time show that you have been managing your credit and you intend to stick around and continue managing your credit.

Timing can work for you

This is great news for you! It means that timing can work in your favor even if you haven't had the best credit in the past. Lenders will want to see that your credit has improved, but they are also going to pay attention to how old your accounts are.

So the first thing to do is to keep your old accounts open. Healthy credit is made healthier with aged accounts.

And the second thing to keep in mind is how timing impacts the loans you get: If you are applying for a mortgage (for example) remember that lenders are paying attention to the timing of credit applications you've made, plus they are looking at how long you've held your accounts. So you can use timing to your advantage: If you are planning to apply for a mortgage and another credit card, consider holding off on the credit card until after you've closed on your new home mortgage.

Review your various accounts, and make sure you keep the oldest ones open! In credit, timing is everything and every second of the ticking clock means that your healthy credit is getting healthier.

If you have a credit concern please email me